What Is Arizona Commercial Umbrella Insurance?

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Whether from a shellfish ingredient in the food or spilled beer on the floor, restaurants and bars face an unlimited number of hazards – many of which are lawsuits waiting to happen. This is reason enough to take extra precautions to protect your bar or restaurant against unexpected occurrences.

Commercial umbrella insurance provides that additional layer of security for your business no matter what hazard the future might bring.

Read on to know more about this type of coverage and why it is the smart choice for your restaurant or bar.

What Is Commercial Umbrella Insurance?

Commercial umbrella insurance provides additional liability protection to an already existing insurance policy. It extends the coverage of your current policy and activates when your policy is at its limit.

For instance, your bar or restaurant is at fault for a customer’s injury, and your business is sued for $500,000. But you only have $300,000 in liability coverage. Commercial umbrella insurance can make up for the $200,000 deficit, subject to the policy’s coverage limits.

As the name implies, commercial umbrella insurance expands the liability coverage for insurance policies such as:

  • Workers compensation insurance
  • Commercial general liability insurance
  • Hired and non-auto insurance

Who Needs Arizona Commercial Umbrella Insurance?

Unfortunately, no Arizona business in the hospitality industry is immune from unforeseen catastrophes, including high-priced lawsuits. Bars and restaurants are at a higher risk of exposure because these businesses interact with people to make a profit.

Your exposure level, industry, and business type will determine whether you should opt for commercial umbrella insurance. Businesses with a high risk of third-party lawsuits require umbrella coverage.

A bar and restaurant business is often at risk of injuries, accidents, and lawsuits. The cost of a single large claim can close down your restaurant or bar for good. Commercial umbrella insurance is the safety net you need to keep your business protected.

How Does Umbrella Insurance Protect Your Business?

If your business already has insurance, commercial umbrella coverage will unlock the limits of your existing policy. It gives restaurants and bar owners additional protection against a variety of liability claims.

Where an accident results in an action, umbrella coverage will provide additional protection above and beyond your current liability policy. It will take care of legal costs that include:

  • Legal defense fees
  • Judgments
  • Settlements

How to Buy Commercial Umbrella Insurance

The majority of the top-tier insurance agencies offer umbrella insurance. However, many will require you to carry your homeowner, condominium, general liability, or auto insurance with them, too. You might need to buy a minimum amount of liability insurance before enjoying umbrella coverage, and the minimum varies by agency.

For example, adding umbrella coverage to your commercial general liability could require $200,000 in workers’ compensation and another $150,000 in product liability that might arise from food poisoning claims.

Another significant factor when shopping for umbrella coverage is the maximum limit offered by the insurance agency. Most umbrella insurance has a policy limit of $5 million. Still, it is possible to find commercial umbrella insurance in Arizona for twice that amount.

arizona commercial umbrella insurance bar and restaurant insurance

What Does Commercial Umbrella Insurance Cover?

Commercial umbrella liability insurance in Arizona expands the coverage of commercial general liability insurance, commercial auto liability insurance, and employer’s liability insurance.

The policy provides additional coverage for the following:

  • Employee injury
  • Third-party bodily injury
  • Auto accidents
  • Third-party property damage

Employee Injury

The addition of umbrella coverage to an employer’s liability insurance (usually a part of workers’ compensation insurance) helps cover the cost of lawsuits emanating from work injuries.

Example: A long-time restaurant employee sues his employer over a chronic back injury from a slip-and-fall accident. In this scenario, umbrella coverage will take care of the legal costs, including lawyer fees, judgment, or out-of-court settlement. The policy will trigger once the claims reach the limits of the underlying policy.

Third-party Bodily Injury

When you combine commercial general liability with commercial umbrella insurance, the latter can cover your legal expenses where an injury occurs in your business place. 

For example, a customer suffers a slip and fall, causing a severe injury resulting in a chronic health issue. To recover the cost of medical treatment, the customer files a claim for $2 million. The restaurant’s commercial general liability has a $1 million policy limit. Your umbrella coverage will cover the remaining expenses above $1 million up to the limit of the umbrella’s policy.

Auto Accidents

An umbrella policy in addition to commercial auto insurance provides extra protection in the event someone files for damages caused by your vehicle.

For example, on the way to pick up supplies, your deliveryman causes a vehicle pileup. The other drivers file a claim for $2 million above your auto insurance policy limit. In this scenario, commercial umbrella insurance can take over the business’ defense costs once the auto policy is depleted. It would also take care of the settlement or court-ordered judgment.

Third-party Property Damage

Commercial umbrella coverage, in addition to general liability coverage, will pay legal expenses resulting from third-party property damage.

Example: Your delivery driver might damage property using your business vehicle and make your business liable. The settlement for that liability could close down your bar or restaurant. But suppose your general liability policy covers $1 million in property damage. In that case, the property umbrella insurance policy will cover the rest of the expenses up to its coverage limit.

What Is not Covered by a Commercial Umbrella Insurance Policy

Commercial umbrella coverage in Arizona will not cover the following:

  • Damages within your primary policy limits
  • Professional errors – You cannot include umbrella coverage in malpractice or professional liability insurance.
  • Employee discrimination lawsuits – You cannot add umbrella insurance to Employment Practices Liability Insurance (EPLI).

Wrap Up

An umbrella insurance can be a convenient addition to your current insurance plan. Reach out today with any questions you may have, or if you wish to request commercial umbrella insurance quotes, and we’ll tell you all about what works best for you!